YouTube and Social Media Influencers Sued for Promoting FTX
- FTX enlisted the services of high-profile influencers to promote its operations.
- Last year, the SEC imposed fines on Kim Kardashian for failing to reveal that she was paid to promote a crypto firm.
A class action lawsuit, led by Edwin Garrison, has accused a well-known group of YouTube financial influencers of ruining their viewers’ finances by recklessly endorsing the defunct cryptocurrency company FTX in exchange for lucrative advertising deals.
The lawsuit, which was filed on Wednesday in federal court in Miami, claims that the network of influencers was crucial in persuading users to use FTX by portraying it as a platform that was reasonably safe. However, the platform turned out to be run by a group of dishonest operators and scammers.
According to the suit,
FTX turned to celebrities and social media endorsers to position itself as the ‘safe’ option among cryptocurrency exchanges. FTX’s paid endorser program was clearly designed to use the positive reputation associated with specific YouTube and other social network influencers to convince consumers that FTX was a safe place to buy and sell cryptocurrency.
Several well-known YouTube influencers are named as defendants in the lawsuit, including Erika Kullberg, Graham Stephan, Andrei Jikh, Jaspreet Singh, Brian Jung, Jeremy Lefebvre, Tom Nash, and Ben Armstrong.
Paffrath, 31, who has 1.87 million followers on his real estate and financial advice page, expressed his sympathy with his followers who lost their funds. He, however, believes he should not be held responsible for any risky investment.
He said,
I lost a lot of money as well on BlockFi — more than I ever made from FTX, frankly — but do I blame the guy who suggested I invest in BlockFi? No. I just put on my big boy pants and accepted the reality of what had happened.
The YouTube influencers claimed that their paid partnership was never a secret. Some said they received six-figure payments from FTX in exchange for endorsing the company. In some of the agreements, the influencer was compensated with commissions for each new client they brought to FTX. Some influencers said they received payments for only referencing the company in their broadcasts.
Some of the YouTube influencers reportedly apologized for mindlessly endorsing FTX. Others hurried to take down old videos of them promoting the exchange. Although the influencers have not been charged with any criminal conduct, legal experts say it is likely some aggressive FTX promoters could face investigation.
FTX rose to become one of the most prominent crypto exchanges within a three-year period. Apart from boasting thousands of customers, FTX caught the world’s attention with its flamboyant mode of operation. The company’s founder, Sam Bankman-Fried, courted the high powers of Washington with his “generous” political donations and took on several public speaking engagements.
FTX also chose a different style when it came to advertising. The company splashed millions on getting high-profile celebrities to represent and endorse it. However, all came crumbling down in early November after the exchange faced a liquidity crisis that eventually forced it to apply for bankruptcy.
FTX’s collapse was not only shocking to many but also disappointing to the thousands of customers with funds on the platform. Although Bankman-Fried has long been arrested, the 30-year-old has continued to maintain his claims of innocence.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
